Specie and Fine Art Market predictability

A Market with so many moving parts and with so many elements changing so quickly!

These days, barely a week goes by without some form of change across the Specie and Fine Art Insurance market.  In the past few months we have seen more change in appetite, underwriting personnel and market conditions than we have in the past 20 years.  As these changes take place, the industries we represent are changing and adapting just as quickly.

Since the outbreak of Covid-19, we have seen the gold price increase.  Despite recent volatility, the price is up significantly year or year.  Likewise, the price of silver has shown a huge growth since March. The effect on the insurance market is a requirement for larger limits for many refiners and bullion dealers in order to reflect this increase.

We have also seen the shutdown of Jewellery stores – some permanently.  Although online sales have remained strong in some parts of the globe, the pandemic has really changed some of the processes involved in purchasing Jewellery.

We have seen Fine Art exhibitions and Auctions becoming virtual, something we certainly would not have imagined even just a year ago.  

Finally, we have witnessed the Cash in Transit industry contracting in certain countries where cash usage has significantly reduced; whilst in other territories ATM usage has significantly increased, with large cash withdrawals suggesting a desire of some to stockpile cash.

During all this period of change the insurance market continues to adapt to these newfound challenges.  Whilst we are certainly seeing developments in the class, from pricing to changes in coverage conditions, the market has shown resilience throughout to service the industries it represents.  Although insurer’s decision-making time may be a bit longer, and they now take longer to consider new business submissions, the market is still very much operational.

Looking ahead, what do we see?  Well, certainly further change.  Several high profile Underwriters have recently left their positions.  There are Underwriters that have moved to develop new capacity, who will be starting in the not-too-distant future, and we no doubt have more changes coming as we head towards the reinsurance season.

So, what does this all mean for clients and how are we placed to tackle some of these challenges?

Undoubtedly, it is more important than ever to keep informed of these developments as they occur; developing a plan with your broker that fits your business needs will become ever more important. Do not expect the process to be the same as it has been in the past.  Be prepared to adapt if you need to, as it is likely you will need to give your insurance arrangements more consideration than you have in the past.  At Howden we would suggest starting the process earlier than usual, particularly as we lead up to the end of the year, as insurers are always busy in the run up to the Holiday Season and New Year.  With the reinsurance season nearly upon us, it is probable that the Specie and Fine Art Underwriters will be asked for greater detail of their own plans and this of course takes time and could have an impact on their levels of service and turnaround time.

Quality of the renewal submissions and information provided will be key, as the insurers will likely focus their time and efforts on those clients that have clearly demonstrated their risk factors and risk mitigation plans.  The presentation of these key factors will help Underwriters assess the risk more effectively and efficiently.  Finally, in the event your current insurer does not deliver the desired outcome, and if your information is of good quality, an alternative market could easily consider the risk.